MSME Loan Eligibility Test — how to check?

 

MSME alludes to Micro, Small, and Medium Enterprises. In light of the yearly turnover of a business house, the size of the undertaking gets characterized. These associations consistently get a few preferences from the Government for speculation and development as effectively accessible and open credit alternatives.

Since the business is one of the foundations that keep the economy of a nation moving and flourishing, MSMEs are treated as one of the most strong parts fit for turning the wheel of the destiny of a nation.

Be that as it may, with regards to qualification for applying and getting the advances authorized for any MSME loan, there is a rundown of procedural determinations that are to be followed immaculately. You can likewise counsel the best budgetary consultant in Delhi NCR to ensure that you are not passing up any models or losing an open door for crediting.

Most definitely, it is the turnover and speculation breaking point of an organization that characterizes the undertaking as a miniaturized scale, medium, little, or a huge one. In the pre-COVID time, the meaning of MSME was unique in relation to the one that has been brought about by the Government of India in the light of the pandemic circumstance.

On thirteenth May 2020, the Government of India gave a new definition for MSME, remembering the pandemic situation. During tough situations like these, the business anticipates more help from the Government, and legitimizing the equivalent, the Government of India has altered the meaning of MSME to make the range of the MSME credit strategy increasingly comprehensive.

As indicated by the most recent alteration, assembling and administration industry organizations, having a yearly turnover of fewer than 5 crores, and speculation adding up to under 1 crore, would be characterized as a piece of the small scope industry. The little scope businesses are the ones that have under 10 crore of the venture and 50 crores of yearly turnovers. Also, for the medium scale ventures, the edge of yearly turnover has been held under 100 crore while the speculation would fringe around 20 crores.

To find out about the details or how to get MSME credits, you may look for the monetary consultancy of the market specialists.

Also, make sure to take the advice of one of the top financial consultants in Delhi NCR to be sure of no flaws.

MSME Loans Explained | COVID-19 Relief

 To support the gradually falling economy, Prime Minister Narendra Modi announced the “Atmanirbhar Bharat Abhiyan” To encourage growth and to develop a self-reliant India. Supporting this Abhiyan Finance Minister Nirmala Sitharaman stressed the five pillars of growth: Infrastructure, economy, technology-driven systems, demand, and demography. The Prime Minister had announced an economic relief package of Rs. 20 Lakh Crore under the scheme Atmanirbhar Bharat Abhiyan, the details of which was unveiled by Finance Minister Nirmala Sitharaman.

Under the relief package due importance was placed on MSMEs as the MSME sector was on the verge of collapse. To improve the conditions under the economic relief scheme the announcements made for MSME are: –

1. MSME definition amended: –

• No distinction between manufacturing and services units.
• Micro: Investment < Rs 1 crore; Turnover < Rs 5 crore
• Small: Investment < Rs 10 crore; Turnover < Rs 50 crore
• Medium: Investment < Rs 20 crore; Turnover < Rs 100 crore

2. Collateral free automatic loans: –

• An outlay of Rs. 3 lakh crore, to benefit 45 lakh MSMEs.
• All MSMEs having 25 crores outstanding in loans and 100 crore turnover are eligible for credit guarantee-backed loans of four-year tenure.
• Interests to be capped
• A 12-month moratorium on principal repayment
• Can be availed till 31stOctober

3. Subordinate debt for stressed MSMEs: –

• Rs 20,000 crore outlay, 2 lakh MSMEs to benefit
• Government to provide Rs 4,000 crore towards partial credit guarantee support to banks
• Banks will lend money to promoters who can use it to infuse it as equity

4. Fund of Funds: –

• Corpus of Rs 10,000 crore
• Will operate through primary and secondary funds
• Will help leverage Rs 50,000 crore at the secondary fund level
• Will help MSMEs to expand the size and get listed on mainboard

5. Local Bids for Government tenders of up to Rs. 200 crore: –

• Foreign tenders will be disallowed for government procurement up to Rs 200 crore
• This is to help MSMEs fight unfair competition from foreign competitors

6. MSME dues and Market access: –

• E-market linkage for MSMEs, as there will be no trade fairs and exhibitions anytime soon due to COVID-19
• All receivables of MSMEs from government and PSUs will be cleared in a period of 45 days

In the previous definition, MSMEs were defined on the basis of investments put in; now the definition also includes the turnover of the company. The Finance Minister also announced that there will be no more distinction between Manufacturing and Service MSMEs. They will now be defined similarly. The definition of MSME is:- how to explain msme loan

To know more information about the economic relief package or the MSMEs contact the Consult Avenue team. We are a consultancy group considered as the top GST consultants in Delhi. Click here to know more.

MSME LOANS FOR FACTORIES Rs 20 LAKS CRORE PACKAGE

On May 13, 2020, the Prime Minister of India, Narendra Modi announced Rs 20 lakh crore package to make our country ‘Self-Reliant’ or ‘Aatmanirbhar’ to fight against the battle caused by Coronavirus outbreak.

These 20 Lakh Crore package announced for the small businesses, power companies, shadow banks, and realtors that face a major economic downfall. In the first tranche of relief package, there are many benefits provided to the MSMEs, which covers Rs 3 Lakh Crore collateral-free loans, Rs 50,000 crores to equity infusion, Rs 20,000 Crore subordinate debts, the revised definition of MSME, e-linkage to the market, and global tender disallowed up to Rs 200 Crore.

In the following paragraphs, we will be discussing how the 20 Lakh Crore package will benefit the MSME sector to mitigate the impact of this global pandemic that led to devastating effects throughout the world.

1.     Collateral free Automatic Loans for Business/factory Owners: This is an emergency credit line MSME loan that is provided by banks and MBFCs. All the MSMEs that meet the eligibility criteria are liable to avail MSME loan. However, there are some strict guidelines also like the borrower must have outstanding less than Rs 25 Crore, and the company turnover is less than Rs 100 Crore. You have to pay off the loan in the next 4 years and 12 months moratorium period on principal repayment.

2.     Subordinate debts for MSMEs: The government of India has also announced Rs 20,000 Crores subordinate debts for stressed MSMEs. The assistance is provided to MSME who is struggling with an equity problem. This scheme will help up to 2 Lakh MSMEs, but it will only be offered to the borrowers once they met their previous secured credits.

3.     Equity Infusion for MSMEs: Another benefit offered to the MSME is Rs 50,000 equity infusion, which is done through funds of funds. It is a strategy to invest in different other types of funds. This will help the MSMEs to expand their business and listed in the stock exchange market.

For more information about the MSME, and loan that is offered by the government, get in touch with the experienced professional of Consult Avenue.

BENEFITS OF MSME LOANS

As we all know the situation due to the COVID-19 pandemic led to cash crunch in the businesses, especially MSME, or SME. Recently, the government announced a collateral-free loan of up to 3 Lakh crore to help the businesses that are dealing with the cash crunch problems. The emergency credit line guarantee scheme is announced for the MSMEs so that they can start their operations as soon as possible without any problem.

       

Let’s discuss the benefits of MSME Loans:

1.     Eligibility: Whether your company is into proprietorship, partnership, trust, a registered company, and a limited liability partnership (LLP), all are eligible for the MSME loans. Only business loans are being covered under this scheme, and if the loans is taken by the owner for his/her capacity then it will not be covered.

    

2.     Interest Rate on Loans: The MSME loans provided to the borrowers are beneficial in terms of interest rates. Moreover, the loan announced by the government for MSMEs is helpful for the borrowers because of low-interest rates. Banks and other financial institutions have kept the interest rates to a maximum of 9.25% per annum. Although, the NBFCs cannot even charge more than 14% interest rates on the loans offered to the MSMEs under this scheme.

3.     Pre-Approve Mechanism: The highlighting part about the MSME loan announced by the government is that it has a pre-approve mechanism, which means you don’t have to go to the lender to apply for the loan. If you are fulfilling the eligibility criteria for the loan scheme, then the lender will automatically offer you the loan.

There are a number of financial consultants available in the market to assist and guide you throughout the loan procedures. One such financial advisor is Consult Avenue for all your finance related help.